During the growth stocks rally of 2021, EV stocks were among the hottest investment themes. Things have changed drastically as investors adopt a cautious approach related to the EV industry. There are reasons to be worries and includes macroeconomic headwinds, intense competition and geopolitical tensions. However, if there was a time to look at EV stocks to buy, it’s now.
The EV industry is at an interesting stage where the markets are segregating the winners from the losers. This was bound to happen with the EV space becoming overly crowded. Not all companies are likely to survive. There will be failures and industry consolidation.
However, the survivors will emerge stronger and possibly grow faster in the coming years. It’s also no secret that value investors buy when there is fear on the streets. This column focuses on three under $10 EV stocks to buy at undervalued levels for multi-bagger returns.
Panasonic Holdings (PCRFF)
Panasonic Holdings (OTCMKTS:PCRFF) is an EV battery manufacturer with an innovation edge. However, PCRFF stock has declined by 32% in the last 12 months. This does not come as a surprise with the EV industry facing multiple headwinds.
Having said that, it’s the best time for long term investors to consider exposure to undervalued EV stocks. It’s worth noting that the battery manufacturer trades at a forward P/E of 6.8. Further, PCRFF stock offers dividend yield of 2.81%. In my view, the stock is a steal at current levels.
Panasonic has some aggressive expansion plans in terms of EV battery capacity addition. Of course, the slowdown in the industry implies that the company will scale-back to some extent. However, the overall target is to quadruple EV battery capacity to 200GWh by 2031. This is likely to translate into healthy growth coupled with EBITDA margin expansion.
On the innovation front, Panasonic is targeting a 25% increase in battery energy density from current levels of 800Wh/L to 1,000Wh/L by 2031. Focus on higher efficiency and safer batteries will ensure that the company maintains or increases its market share.
Blink Charging (BLNK)
There are several EV charging stocks trading under $10. However, several names will perish on the back of sustained cash burn and intense industry competition. Blink Charging (NASDAQ:BLNK) is among the players positioned to survive and create value.
The first point to note is that Blink has been delivering healthy growth. For Q1 2024, the company reported revenue growth of 73% on a year-on-year basis to $37.6 million. With ample room for penetration in North America and Europe, I expect the healthy top-line growth to sustain.
The second big positive is that Blink is moving towards EBITDA level profitability. The EV charging company expects positive adjusted EBITDA run-rate by December 2024. With healthy growth, operating leverage will ensure that EBITDA margin expansion sustains in the coming years. Growth in services revenue will also support the margin expansion story.
Solid Power (SLDP)
Solid Power (NASDAQ:SLDP) stock had listed in May 2021 and traded at highs of around $15 during that year. There has been a sustained decline in SLDP stock since the last quarter of 2021. Currently, the stock trades at $1.69 and I believe that it’s a golden buying opportunity.
As an overview, Solid Power is working towards the commercialization of solid-state batteries. The stock can therefore go ballistic if the company is successful. I would be willing to take some exposure in this high-risk stock considering the fact that Solid Power has the backing of automotive majors like BMW (OTCMKTS:BMWYY) and Ford (NYSE:F).
As a matter of fact, the solid-state battery maker has licensed its cell design and technology to BMW for parallel research and development. Earlier this year, Solid Power also licensed its technology to SK On for R&D in South Korea. With collaborative efforts, it’s likely that Solid Power will achieve success.
In terms of business progress, Solid Power delivered A-1 sample cells to automotive partners in 2023 for validation testing. This year, the target is to deliver A-2 sample cells that will incorporate planned improvements and address known challenges from the A-1 design.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
